Showing posts with label Oil. Show all posts
Showing posts with label Oil. Show all posts

Friday, June 20, 2014

Replacing Maliki No Panacea For Iraq

As the Obama administration is about to send military advisers to assist Iraq’s government there are growing reports that Washington wants Prime Minister Nouri al-Maliki to be replaced. The argument is that the premier is a divisive figure and that by getting rid of him the country’s politics can move forward, which will in turn help counter the insurgency. Finding a new prime minister could definitely improve the atmosphere in Baghdad in the short term, but it is no panacea for the deep structural problems facing Iraq.
Pres Obama wants PM Maliki to carry out reforms, which some Iraqi parties are taking for a call for his replacement (Defenselink)

President Barak Obama has called for a more inclusive government in Iraq as a caveat of receiving American military aid. The New York Times reported that some Iraqi politicians are taking this to mean that Washington is opposed to Prime Minister Nouri al-Maliki returning for a third term. The Guardian wrote that even Iran might be tiring of Maliki’s rule, although that is contradicted by other stories. The argument is that the premier has caused so much distrust within the country’s establishment that he must go if Iraq is to create a new government that includes the three major ethnosectarian groups the Shiites, the Sunnis, and the Kurds. Together this new ruling coalition is supposed to reach out to Sunnis so that they will not give at least passive support to the insurgency and help unite the country overall in the face of the growing violence.
A new premier from Ammar Hakim's ISCI (left) could lead to better relations with Kurdish Premier Nechirvan Barzani (right) and the KRG (KRG)

A new premier could help Iraq with some of its short-term problems. For instance a new premier from say the Islamic Supreme Council of Iraqi (ISCI) would have a much better relationship with the Kurds who have lost complete trust in Maliki. ISCI and the ruling Kurdish parties have had a good relationship dating back to the 1980s when both were supported by Iran and fought on Tehran’s side in the Iran-Iraq War. Those lists could work together and come to an oil export agreement that would actually be followed through with rather than the last two where Maliki refused to pay the Kurdistan Regional Government (KRG) all the money that it was owed. There also would not such heated rhetoric between Baghdad and Irbil the capital of Kurdistan. Parties like Speaker Osama Nujafi’s Mutahidun might be more willing to join a coalition as well since it currently opposes Maliki returning to office. A new national unity government could therefore be put together based upon the shared animosity towards the premier and make some deals between the lists.  

Those short-term gains however would not overcome Iraq’s deep-seated institutional problems. For instance, any new coalition would still be based upon ethnosectarian quotas where ministers and other officials are named not by their competence, but rather by their party being Sunni, Shiite, or Kurdish. The endemic corruption would not end as this has become a means of governance where every winning party gets to steal part of the government pie to enrich itself and maintain its patronage networks. The economy would still be the most oil dependent in the world, and the parliament would be no closer to passing an oil law as the Sadrists and ISCI both want central control over the industry, while the Kurds want autonomy. Other reforms that have been called on for years such as ending deBaathification are unlikely to come about since parties like the Sadrists are ardent supporters of it. The competence of the Iraqi Security Forces would not suddenly improve, and neither would its counter productive tactics either. The new premier would likely follow the same types of coup proofing tactics that Maliki and every other leader in the Middle East has done, which is to put loyalists in top positions and maintain Maliki's separate chain of command over the army and police. Finally, every government since 2005 has been a national unity one. The simple inclusion of parties from each group did not stop the insurgency back then and will not deter it now. The Islamic State of Iraq and the Levant (ISIS), the Baathist Naqshibandi, and others are not interested in being included the government, but rather want to overthrow it. Sunni votes were spread across several different parties as well who do not agree with each other showing that at least those who voted would not suddenly unite either, because there is no agreement upon which party or individual should be the leader. Without solving these long-term issues Iraq’s future would still appear dim.

The talk of replacing Maliki is a popular one, but it provides no real solutions to Iraq’s deep seated problems and divisions. The greater cooperation amongst the major lists that might emerge in the aftermath of Maliki not be re-elected premier would likely fade with time, and all the internal political divisions over centralism versus federalism, the oil industry, etc. would re-emerge. Not only that, but the appearance of a new united front amongst the elite is not going to suddenly lead to a Sunni consensus to try politics again or more importantly end the insurgency. Therefore any short-term gains from Maliki being replaced will not pan out over time leaving Iraq still a very divided and violent country.


Associated Press, “Obama says Iraq’s government cannot resolve the country’s crisis unless it is more inclusive,” 6/19/14

Chulov, Martin and Ackerman, Spencer, “How Nouri al-Maliki fell out of favour with the US,” Guardian, 6/19/14

Habib, Mustafa, “let the post election horse trading begin: iraqi politicians playing the long game,” Niqash, 5/22/14

Al Mada, “Eight blocks, most notably united and the nationalists form union and endorse any candidate from the Shiite alliance,” 5/29/14

National Iraqi News Agency, “An informed source reveals Iran’s agreement on Maliki’s nomination for third term,” 6/4/14

New Sabah, “”Citizens” and “Liberals” talking about “strong government” and Erbil raise the ceiling demands: annexation of Kirkuk and Khanaqin,” 5/22/14

Rubin, Alissa and Nordland, Rod, “Iraqi Factions Jockey to Oust Maliki, Citing U.S. Support,” New York Times, 6/19/14

Shafaq News, “Nujaifi , Allawi and al-Mutlaq agree to work as a unified team,” 5/26/14

Monday, May 12, 2014

Increased Output From Southern Iraq Raises Oil Exports In April 2014

Iraq’s oil exports recovered in April 2014 despite its northern pipeline still being out of service. This was due to the country’s southern outlets increasing their output, thanks to increased capacity and a new central metering and manifold platform opening. The Basra pipeline will have to sustain this effort because it doesn’t seem like the Kirkuk line will be repaired any time soon due to the insurgency.

From March to April 2014 Iraq’s exports increased by over 110,000 barrels a day. Its flow to foreign markets went from 2.396 million barrels a day in March to 2.509 million in April. Almost all of this came from Iraq’s southern Basra pipeline. The northern Kirkuk line remains down since early last month when insurgents bombed it in Ninewa and then kept away repair crews. The flow through the south increased from 2.37 million to 2.509 million because of increased capacity at the two single point mooring facilities, along with a new central metering and manifold platform, which facilities exports through the two points. Each mooring has a capacity of 900,000 barrels a day but operates below that level due to a lack of pumping capacity, inadequate storage tanks, and other issues. A third mooring station is due to open in the middle of this year, and a fourth by the end of it. That will greatly enhance the country’s exports. Without that added capacity fields such as West Qurna 2 and Majnoon, which are just now ramping up, would have to cut their production since there is not enough storage space for much express petroleum that is not exported. The south already handles the vast majority of Iraq’s oil sales, and the country may become solely dependent upon it since the insurgency is increasing in the north making the Kirkuk line unreliable. Militants and oil smugglers attacked it almost once a week in 2013. Now it has been down for two months and there are no immediate plans to get it up and working again because it is too dangerous for work crews to go to the damaged section and repair it.

Iraq Oil Exports And Profits 2011-2013
Avg. Price Per Barrel
Revenue (Bill)
Jan. 11
2011 Avg.
Jan. 12
Jan. 13
2013 Avg.
Jan. 14

Oil Exports Through Basra 2012-2013
January 2012 1.711 mil/bar/day
February 1.639 mil/bar/day
March 1.917 mil/bar/day
April 2.115 mil/bar/day
May 2.086 mil/bar/day
June 2.085 mil/bar/day
July 2.216 mil/bar/day
August 2.252 mil/bar/day
September 2.178 mil/bar/day
October 2.172 mil/bar/day
November 2.122 mil/bar/day
December 2.022 mil/bar/day
2012 Avg. 2.042 mil/bar/day
January 2013 2.093 mil/bar/day
February 2.196 mil/bar/day
March 2.1 mil/bar/day
April 2.31 mil/bar/day
May 2.19 mil/bar/day
June 2.13 mil/bar/day
July 2.32 mil/bar/day
August 2.30 mil/bar/day
September 1.90 mil/bar/day
October 2.06 mil/bar/day
November 2.281 mil/bar/day
December 2.081 mil/bar/day
2013 Avg. 2.16 mil/bar/day
January 2014 2.036 mil/bar/day
February 2.507 mil/bar/day
March 2.370 mil/bar/day
April 2.509 mil/bar/day

Oil Exports Through Kirkuk 2012-2013
January 2012 393,500 bar/day
February 375,800 bar/day
March 400,000 bar/day
April 393,300 bar/day
May 364,500 bar/day
June 316,600 bar/day
July 300,000 bar/day
August 312,900 bar/day
September 420,000 bar/day
October 451,600 bar/day
November 426,600 bar/day
December 325,800 bar/day
2012 Avg. 373,300 bar/day
January 2013 264,500 bar/day
February 339,200 bar/day
March 316,100 bar/day
April 306,600 bar/day
May 283,800 bar/day
June 193,300 bar/day
July 180,600 bar/day
August 270,900 bar/day
September 250,000 bar/day
October 193,000 bar/day
November 309,00 bar/day
December 260,000 bar/day
2013 Avg. 264,200 bar/day
January 2014 192,000 bar/day
February 292,000 bar/day
March 25,806 bar/day
April 0 bar/day

The average price per barrel for Iraqi crude has not been released yet, but it remained above $100 in April. That meant the country was able to bring in $7.577 billion that month, roughly the same as March’s $7.507 billion. Prices have remained $100 or more since July, but they were heading downwards this year form $102.37 in January to $101.03 in March. The 2014 draft budget, which has not been passed yet due to political disputes relies upon oil for more than 90% of its funding. If the Oil Ministry is not able to keep up exports it will cause widespread financial problems. That puts added pressure for Baghdad to get the two new moorings up and running this year. The problem is that Iraq rarely finishes any major projects on time. The third mooring should still open this year, but the fourth may have to wait until 2015 if things don’t go right.

Iraq is increasing its petroleum production at a time when its export infrastructure is barely keeping pace. Anytime bad weather hits, maintenance is carried out, or a terrorist attack takes down one of the pipelines or shuts down a port, output at the fields has to be reduced, sometimes leading to re-injecting the oil back into them, which can damage the wells. The longer the fields are down the longer it takes to get output back up. Luckily the mooring stations in Basra are running at a higher rate so they can relieve some of this pressure. The same cannot be said for the north where major fields like Kirkuk are hampered by the line to Turkey being down. For the time being Iraq will have to solely rely upon its southern ports to handle all of its exports and earn most of its money since security is too bad in the center to get the Kirkuk line back up for now.


Lando, Ben, “Despite March exports drop, record output for new buoys,” Iraq Oil Report, 4/11/14

Lando, Ben, Al-Najaf, Kamaran, “Iraqi exports rebound despite loss of northern pipeline,” Iraq Oil Report, 5/4/14

Lawler, Alex, “Iraq’s southern oil exports on track for record in April,” Reuters, 4/23/14

Al-Najaf, Kamaran, Lando, Ben, “Iraq’s March oil exports fall by 400k bpd,” Iraq Oil Report, 4/25/14